News Details

OLATHE, Kan. - NIC Inc. (Nasdaq: EGOV), the dominant provider of digital government services, today announced net income of $15.9 million and earnings per share of 24 cents on total revenues of $87.0 million for the three months ended September 30, 2018. In the third quarter of 2017, the Company reported net income of $14.0 million and earnings per share of 21 cents on total revenues of $84.5 million.

Quarterly portal revenues were $80.9 million, a 6 percent increase over the third quarter of 2017. On a same-state basis, portal revenues increased 9 percent over the prior year quarter. Same-state, transaction-based revenues from Interactive Government Services (IGS) rose 11 percent over the third quarter of 2017, due primarily to higher volumes from a variety of services, including driver's license renewals and income tax filings, among others. Same-state, transaction-based revenues from Driver History Records (DHR) were up 4 percent due to a price increase in one state and higher volumes across several states. Same-state portal software development revenues increased 74 percent, driven primarily by time & materials projects deployed in various states.

Third quarter 2018 portal revenues included $13.3 million from the legacy Texas portal contract, which expired August 31, 2018, and $2.0 million from the new Texas payment processing contract, which began September 1, 2018. Revenues from the legacy Texas portal contract totaled $16.5 million in the prior year quarter. All revenues from operations in the state of Texas have been removed from the same-state category for comparability purposes.

Software & services revenues were $6.1 million in the current quarter, down 24 percent from the third quarter of 2017. Results in the prior year quarter reflect a one-time spike in revenues of approximately $2.8 million from the sale of Lifetime Senior Passes through the YourPassNow digital park pass service, managed by NIC on behalf of the National Park Service. Demand for the lifetime Senior Pass increased significantly in July and August of 2017 due to a pending legislative price increase that became effective August 28, 2017.

Operating income for the third quarter of 2018 decreased 3 percent to $19.4 million, driven by the decline in software & services gross profit resulting from the non-recurring spike in Lifetime Senior Pass revenues in the prior year quarter, an increase in selling & administrative expenses driven by personnel costs for business development and company-wide information technology operations, in addition to higher incentive-based compensation, and an increase in intangible asset amortization, driven in part by the previously announced purchase of a suite of prescription drug monitoring software assets from Leap Orbit in July 2018, branded by NIC as RxGov. The Company's operating income margin also decreased to 22 percent for the current quarter, from 24 percent in the prior year quarter.

The Company's effective tax rate in the current quarter was 19 percent, down from 30 percent in the prior year quarter. The lower rate was primarily attributable to favorable benefits related to the Tax Cuts and Jobs Act of 2017. In addition, the Company's effective tax rate in the third quarter of 2018 reflects a release of reserves for unrecognized income tax benefits due to the expiration of the statutes of limitations for certain tax years, and to a lesser extent, an increase in the previously estimated research and development tax credit for the 2017 and 2018 tax years upon the filing of the Company's 2017 federal tax return during the current quarter. Combined, these discrete tax items increased earnings per share in the current quarter by approximately two cents. NIC's 30 percent effective tax rate in the prior year quarter reflects an increase in the previously estimated research and development tax credit for the 2016 and 2017 tax years upon the filing of the Company's 2016 federal tax return, and a release of reserves for unrecognized income tax benefits due to the expiration of the statutes of limitations for certain tax years. Combined, these discrete tax items increased earnings per share in the prior year quarter by approximately two cents. Prospectively, the Company currently expects its effective tax rate to approximate 24 percent, excluding potential discrete tax items.

"Our core teams continued to perform well this quarter," said Harry Herington, NIC Chief Executive Officer and Chairman of the Board. "They consistently generate strong same-state revenue growth from Interactive Government Services, demonstrating that citizens and businesses continue to prefer the efficient, innovative digital government services we provide in collaboration with our government partners."

On October 28, 2018, the Company's Board of Directors declared a regular quarterly cash dividend of 8 cents per share, payable to stockholders of record as of December 4, 2018. The dividend, which is expected to total approximately $5.4 million based on the current number of shares outstanding, will be paid on December 18, 2018, out of the Company's available cash.

Operational Highlights

As previously announced, the Company was awarded a new contract by the U.S. General Services Administration (GSA) to implement a GSA-led information technology modernization project for the United States Department of Agriculture (USDA). The Company will deliver a Voice of the Customer (VOC) tool, which will enable the USDA to aggregate customer feedback from multiple channels providing a thorough understanding of how people interact with the department.

The state of Maine recently awarded NIC subsidiary, the Maine Information Network, LLC, an 18-month extension taking the contract through the end of June 2020. In addition, the Colorado Statewide Internet Portal Authority recently announced its Board of Directors approved it to enter into contract negotiations to renew the contract with the Company's subsidiary, Colorado Interactive, LLC.

Third Quarter Earnings Call and Webcast Details

On the November 1, 2018 call, the Company will discuss its 2018 third quarter financial and operational results, and answer questions from the investment community. The call may also include discussion of Company developments, and forward-looking and other material information about business and financial matters.

Webcast Information

To sign in for audio and slide presentation: The Webcast system is available at https://www.egov.com/investor-relations.

A replay of the Webcast will be available by visiting https://www.egov.com/investor-relations.

About NIC

NIC Inc. (Nasdaq: EGOV) is the nation's premier provider of innovative digital government solutions and secure payment processing, which help make government interactions more accessible for everyone through technology. The family of NIC companies has developed a library of more than 13,000 digital government services for more than 5,500 federal, state, and local government agencies. Among these solutions is the ground-breaking personal assistant for government, Gov2Go, delivering citizens personalized reminders and a single access point for government interactions. More information is available at www.egov.com.

Cautionary Statement Regarding Forward-Looking Information

Any statements made in this release that do not relate to historical or current facts constitute forward-looking statements. These statements include statements regarding the Company's potential financial performance for the 2018 fiscal year, estimates, projections, the expected length of contract terms, statements relating to the Company's business plans, objectives and expected operating results, statements relating to potential new contracts or renewals, statements relating to the Company's expected effective tax rate and the potential effect of tax law changes, statements relating to possible future dividends and share repurchases, and other possible future events, including potential acquisitions, and the assumptions upon which those statements are based. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. These risks include regional or national business, political, economic, competitive, social and market conditions, including various termination rights of the Company and its partners, the ability of the Company to renew existing contracts - in whole or in part, and to sign contracts with new federal, state, and local government agencies, the Company's ability to identify and acquire suitable acquisition candidates and to successfully integrate any acquired businesses, as well as possible data security incidents. Any statements regarding our expected effective tax rate for 2018 reflect provisional amounts subject to adjustment during the one-year measurement period permitted under applicable law. You should not rely on any forward-looking statement as a prediction or guarantee about the future. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the sections titled "Risk Factors" and "Cautions About Forward-Looking Statements" of the Company's most recent Forms 10-K and 10-Q filed with the SEC. These filings are available at the SEC's web site at www.sec.gov. Any forward-looking statements included in this release speak only as of the date of this release. Except as may be required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

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NIC Inc.
Angela Davied, 913-754-7054
adavied@egov.com